He also targeted PM Modi over "hasty" implementation of the GST, and his pet bullet train project.
"If my prime minister had asked me to do demonetisation, I would have advised him 'please don't', and if he had insisted, then I would have resigned," he told reporters on the sidelines of an event where he delivered a lecture on 'The state of economy'.
Noting that demonetisation and "rushing through with the GST were two major mistakes" of the Modi government, he said, "demonetisation was a bad idea, full stop. GST is a good idea, but it has been hastily implemented. It should have been implemented with due care and attention."
Pitching for a cap on the Goods and Services Tax (GST) at 18 per cent, the former Union minister flayed multiple slabs in the rate structure.
Delivering the lecture on the economy organised by the local trading community, Mr Chidambaram said the prime minister's ambitious bullet train project between Ahmedabad and Mumbai should not have been a priority.
Focus, he said, should have been on improving safety, cleanliness, better compartments and stations, better signalling systems and improving suburban transport.
"Hardly 600 people will use bullet train (on one way journey) when it is completed, and government has borrowed huge amount of money from Japan for this. Instead the government should utilise the money for health and education, which the people want," he said, adding bullet train can become a priority 10-15 years later not now.
He also flayed the Gujarat model of development, saying "Vikas gando thayo che (development has gone crazy)". The Congress has launched a social media campaign in the poll-bound state by the same name.
Mr Chidambaram criticised the Election Commission for not declaring the dates for Gujarat and Himachal Pradesh polls simultaneously.
"There was an unusual delay in declaring poll dates for Gujarat. The only conclusion is that the (central) government wanted to prevent announcement of sops by the Congress government there (in Himachal) and wanted to do the same in Gujarat. The EC could have either declared it (the polls) together on October 12 or on October 24."
Apparently targeting the government over the arrest of journalist Vinod Verma in connection with the alleged sex tape scandal involving a Chhattisgarh minister, Mr Chidambaram alleged efforts were being made to "silence" critics, especially journalists who do investigative stories.